The Only Major Gold Discovery in a Decade, Gone, Goodbye!

In mid-2006, I had already been fully investedin the PM mining sector for four years. Junior mining was RED HOT; and thus, many small stocks were rising dramatically. Following a 20-year bear market, gold supply had been stagnant for a decade. However, hopes were high due to significantly increased exploration spending – care of a VERY strong mining capital market.

Moreover, such excitement “stair-stepped” further in June 2006, when a small Canadian junior miner called Aurelian Resources made an ENORMOUS discovery. Per the below, fateful press release, the Fruta del Norte deposit in Ecuador was hands down, the largest discovery in years…

…and subsequently, catalyzing the TSX Venture’s surge to its ALL-TIME HIGH of 3,300 in April 2007; from which – tragically – it plunged 80%, en route to today’s valuation 70% below the 2007 highs…

Aurelian’s initial resource estimates were published in 2007, helping to boost the below global discoveries table; in terms of both ounces and – more importantly – grade; as the higher the grade, the lower the extraction cost (as a general “rule of thumb.”) By the way, the “initial ounces” table must be taken with a grain of salt; as it includes both highly developed “proven and probable” RESERVES and extremely speculative “measured, indicated, and inferred” RESOURCES. For “my money,” I’d bet 90% of such “initial ounces were in the most speculative resource category of all – “inferred”…

Irrespective, you can see that both the initial ounces and grades of new discoveries have since plunged – as discussed in my recent RANT, “PRECIOUS METALS SUPPLY CRUNCH”. Moreover, based on the below article – from last week – such data should collapse further in the coming years; perhaps, for a decade…

After exhaustive research, I have not been able to find an estimate for the incremental capital Kinross has since put into Fruta del Norte. However, as Kinross has not changed the project’s resource estimate since a December 2010 technical report…

…as Kinross simply WALKED AWAY from the project, taking a $720 million write-off, or 72% of the 2008 purchase cost; and further validating that Kinross has spent very little developing the project since acquiring it five years ago…The Fruta del Norte project, which Kinross Gold bought five years ago for about $1 billion – and is seen as the world’s largest untapped gold resource; is being abandoned because Kinross isn’t willing to pay a 70 percent windfall profits tax demanded by Quito.
…causing its stock price to plummet to an ALL-TIME LOW…

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